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Endogeneity and the relationship between board structure and firm performance: a simultaneous equation analysis for the Athens Stock Exchange

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  • A. A. Drakos

    (Department of Business Administration, Athens University of Economics and Business, Patision, Athens, Greece)

  • F. V. Bekiris

    (Department of Business Administration, Athens University of Economics and Business, Patision, Athens, Greece)

Abstract

The main goal of this paper is to examine the relationship between the three most important characteristics of the board of directors with firm performance. More specifically, we investigate whether the independence of the board, the leadership structure and the board size, are exogenous determinants to the firm's performance, using a simultaneous equations framework. Our database is composed of firms quoted in the ASE, starting from 146 observations in 2000 and ending with 232 firms in 2006. The findings suggest that the board independence and the leadership structure do not affect the firm performance. On the other hand, an inverse relationship between board size and firm performance is observed. Copyright © 2010 John Wiley & Sons, Ltd.

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  • A. A. Drakos & F. V. Bekiris, 2010. "Endogeneity and the relationship between board structure and firm performance: a simultaneous equation analysis for the Athens Stock Exchange," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 387-401.
    • Handle: RePEc:wly:mgtdec:v:31:y:2010:i:6:p:387-401
    DOI: 10.1002/mde.1492
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